NBC Boss Explains Why Boxee Users Can't Have Hulu

Why does the TV industry need to keep Web video off your big-screen TV? Not because it hates technology. But because it hasn't figured out how to make money off Web video yet -- and needs you to keep watching TV on your TV.

NBC Universal CEO Jeff Zucker all but admitted as much in a keynote this morning: "What we’ve lost in viewers and advertising dollars on the analog side isn’t being made up for at all on the digital side. We want to find an economic model that makes sense."

Boxee even has a Twitter account set up with the latest status. As of Monday, Hulu was "not working properly" -- "seems to stop playing after a few minutes." It's gone back and forth about ten times.

Why is this war even necessary? Because Hulu's parents don't want Hulu viewers watching Hulu videos anywhere near a TV set.

Watching Hulu on a computer/Web browser is a fine, if unprofitable experiment for the media companies. But letting people get in the habit of watching that money-losing video on a TV set -- that's trouble. And that's Boxee's problem because Boxee makes it very easy to watch Web video -- including Hulu -- on a TV, either via a laptop or Mac mini (now with iPhone remote control software) or an Apple TV set-top box.

Meanwhile, NBC and Fox only get paid when you watch the TV shows on TV or cable, which gets them Nielsen ratings and subscriber fees. Internet revenues from the likes of Hulu are puny. So they can't afford to lose viewers to Web video shows on TV when they need them to be watching TV shows on TV. That's the gist of Zucker's quote.

Longer term, this anti-customer strategy will fail. (See: Music industry v. Internet.) But perhaps it saves the networks a few years, and could open more opportunities for the cable industry to build up their on-demand content and technologies so that subscribers at least keep feeding the monster $80 a month.